Jimitota Onuyume
6 July 2009
(Page 2 of 3)
How should a free zone like this benefit host local government, state and the federal government?
Free Zones all over the world have been instrumental in boosting industrial and economic growth. Although some 50% of them have been failures. According to the Onne Oil and Gas Free Zone Authority some of the advantages for Nigeria in establishing the Free Zone are "greater levels of foreign direct investment; technology transfer; manpower development; provision of employment opportunities and greater economic self-reliance". I agree with that.
My only worry is that there is no demonstrable benefit to Nigeria for the Onne Oil and Gas Free Zone beyond that of an Industrial Estate since it commenced operation some 12 years ago. Meanwhile we lose billions of Naira and our brothers and sisters are treated as slaves in their fatherland.
In a nutshell Nigeria is not benefiting from her huge investment in the Onne Oil and Gas free zone beyond that accruable to an Industrial Estate.
The Eleme Local Government Council is crying of justice as the companies in the Onne Oil and Gas Free Zone do not pay levies to the local government and do not contribute to the development of the area. The host communities are also complaining of neglect, as the companies shy away from their corporate social responsibility. The state government revenue is negatively impacted, as expatriates do not pay any PAYE Taxes, although their Nigerian counterparts are made to pay taxes by the same law.
This is discrimination and an unnecessary one for that. The workers are crying as their rights are vehemently abused. The federal government despite its huge investment is losing billions of naira through the inappropriate use of the Free Zone by the companies and the disturbing manner the free zone status is accorded these companies. So who is benefiting from the huge investment in the free zone? Like I said before I struggle to understand the rationale for establishing a free zone for oil and gas.
The Onne oil and gas free zone should be changed to Onne Oil and Gas Industrial Estate, the operations, incentives and enabling legislations reviewed accordingly with a view to ensuring that the current loopholes and inconsistencies in the administration of the Oil and Gas free zone are blocked in the interest of the country. The Federal Government should also investigate the operations and activities in the Onne Oil and Gas Free Zone in the interest of the country.
In your view what are the kind of companies that should operate in the free zone?
A critical review of the Nigerian Economy will reveal that we do not need a free zone for oil and gas. This position is further strengthened by the fact that Nigeria is the only country in the world with a Free trade Zone dedicated to oil and gas. It is very wrong and we must not shy away from making the necessary correction. We need a Free Trade Zone for manufacturing and commerce, no doubt.
That is even why Free Trade Zones are under the Federal Ministry of Commerce and Industry. We need to channel these incentives to the manufacturing sector, the textile industries, commerce and agriculture. We need to attract Foreign Direct Investment (FDI) in the industrial and agricultural sectors to boost economic activities and create jobs. We are talking about a population of over 140 million people with fertile lands and a lot of solid minerals. That is a huge market.
FDI in Nigeria is largely Oil companies' reinvested earnings, and more recently we have good inflows from the telecommunications sector. The Government should seek for ways of attracting FDI for manufacturing, agriculture, solid mineral development and commerce as these will boost the economy, diversify it from oil and gas and reduce the vulnerability of the Nigerian economy to shocks in the international oil and gas market.
Since the 1970s and the collapse of agriculture, Nigeria became a mono-product economy and it is not difficult to see the benefits of diversifying the economy. Why are manufacturing companies closing shop? What could be done to revive them and in fact bring onboard new ones?
How can we attract FDI in the manufacturing, commerce, solid mineral development and agricultural sectors? These are the sectors where we need a free zone, not oil and gas.
Can you explain how they are missing at the free zone?
I really struggle to see the use of a dedicated free zone for oil and gas. It makes no meaning at all. Oil companies will go to wherever they find accessible oil and gas in commercial quantity. Moreover there are already incentives in the MOU with the Federal government and other legislations for oil and gas operations.
The Onne Oil and Gas free zone is a mistake that is adding no value to the economy as aforesaid and is in fact bleeding the country and therefore ought to be urgently corrected. Let me give another example. With no expatriate quota restriction, 100% repatriation of capital and profits, and 100% exemption from PAYE tax by these expatriates where is the Nigerian Content in all these?
In case you do not know it costs about 34 times more to keep an expatriate than a Nigerian and the Nigerian Government through the NNPC eventually pays about 60% of that cost. Mind you no oil and gas fabrication facility exist in the Onne oil and Gas Free zone and almost all oil and gas tools, equipments and materials used in Nigeria and in the Free Zone are all imported. This is happening over 12 years after the commencement of the Onne Oil and Gas Free Zone.
What is the way out of these challenges you have identified in the free zone?
The Onne oil and gas free zone should be changed to Onne Oil and Gas Industrial Estate. The operations, incentives and enabling legislations should be reviewed accordingly.
The current loopholes and inconsistencies in the administration and operations of the Oil and Gas free zone should be removed in the interest of the country. The constitutional right of the workers to join a trade union and bargain collectively should be respected in the interest of rule of law and industrial peace and harmony.
The Federal Government should investigate the operations and activities in the Onne Oil and Gas Free Zone with a view to documenting the abuses and loses to the country. It is important we learn from it and apply that learning for the benefit of the country.
Militants in the region recently threatened to include oil workers in the region as part of their objects of attack. Any comment on this sad position?
I would like to appeal to them to show restraint. The oil workers are mainly ordinary Nigerians. They're brothers and sisters who are just trying to make a living. They appreciate the problems of the Niger Delta and have joined other well-meaning Nigerians in advocating for the urgent need to develop the Niger Delta. Killing or maiming the oil workers will not solve the development problems of the Niger Delta.
It will only bring more pains and hardship to the ordinary Nigerians who do not have the power to cause a positive change in the Niger Delta.
How has the crisis affected oil workers?
The Niger Delta crises have adversely affected the oil workers. Some of the workers have been killed, others kidnapped and maimed. Their families and indeed that of other persons residing in the Niger Delta have not been spared. Their spouses and children have been killed, kidnapped, tortured or traumatized.
It is indeed a very pathetic and pitiful situation. Some of them are still in the kidnappers' custody even after 9 months. Meanwhile oil production has reduced from a projection of about 3.5 million barrels of oil to the actual of about 1.4million. You will recall that in 2005, the Federal government had projected to produce about 4mln barrels of oil per day.
That formed the basis of investment by the Government and the Joint venture partners. People were employed, equipments ordered and commitments made to ensure the projection was achieved. The unusual escalation of violence in the Niger Delta from the 1st quarter of 2006 to date destroyed all that.
At the current production of about 1.4mln barrels of oil per day it is not difficult to see the magnitude of the impact of the crises on the Nigerian economy.
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